Deficit Fever: Loon Tune Time Among the Elite

We already knew that the folks involved in debating and designing economic policy had a weak understanding of economics, that is why they couldn't see the $8 trillion housing bubble that wrecked the economy, but now it seems that they are breaking their ties to reality altogether. The country is still smoldering in the wreckage of the collapsed housing bubble, but the victims have left the policy debate altogether.

Twenty-five million people are unemployed, underemployed or out of the workforce altogether, but that's not on anyone's agenda. Millions of homeowners are underwater in their mortgage and facing the loss of their homes, that's also not on anyone's agenda. Tens of millions of baby boomers are at the edge of retirement and have just lost their life savings. This also is not on anyone's agenda.

Deficit-cutting fever is the current craze in the nation's capital. But even here there is little tie to reality. House budget committee chairman Paul Ryan put out a budget that proposes that in 2050 we will be spending less on defense, domestic discretionary and various non-medical entitlements together than we spend on defense today. And most of the punditry praise its seriousness. Meanwhile, the Progressive Caucus, the largest single bloc in Congress, proposes a way to get to a balanced budget by 2021, and it is virtually ignored.

There are certainly grounds to criticize the caucus' budget, since it is not perfect. My list of deficit reducers would include requiring the Fed to hold $3 trillion in debt, as a way to save $1.5 trillion in interest payments over the course of a decade. I would also give Medicare beneficiaries the option to buy into more efficient health care systems in other countries. This would both save money and show people that we can get top quality care for a hell of a lot less money. And I don't buy the need for major deficit reduction in the first place, but if you want a serious effort to balance the budget, here it is.

Remarkably, the elite media have almost completely ignored it. David Brooks just wrote a new deficit whining track in which he paid zero attention to the Progressive Caucus's budget or any of the proposals it contained. In his discussion of the release of the caucus' budget, Washington Post columnist Dana Milbank turned into a fashion critic. He devoted more space to discussing the tie worn by Representative Raul Grijalva (the chair of the Progressive Caucus) then he did discussing the substance of the proposals.

If the budget cutters were serious then the caucus' proposal would be very much at the center of the debate. All of its proposals poll reasonably well and have been tested in the United States or elsewhere. On the revenue side it calls for raising taxes on the wealthy, but not to levels that are higher than they were in past decades. It also calls for a tax on financial speculation similar to the one that the UK has had for decades and the U.S. actually had prior to 1966.

On the spending side it calls for a quick end to the wars in Iraq and Afghanistan and a return to post-cold war levels of military spending. It calls for a public option for health care to save on the costs of the health care exchanges in the ACA. And it calls for negotiating prescription drug prices in Medicare.

All of these proposals pass the laugh test in terms of being practical and politically feasible in the sense that the public would support them. These proposals may not be politically feasible in the sense that the people who pay for political campaigns and own major news outlets do not like them.

But this is still helpful. The Progressive Caucus has done the country an enormous service in producing its budget. They have helped to show as clearly as possible that the deficit hawks do not give a damn about reducing deficits and balancing the budget. They want to cut the programs that the poor and middle class depend upon -- programs like Social Security, Medicare, and Medicaid -- so that the rich can have more money in their pockets.

Deficit reduction as it is usually discussed is a give to the rich agenda. The fact that the Progressive Caucus budget was so universally ignored drives this point home very well.

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.